A junior
mortgage or lein is a type of mortgage that is subsequent to another
that has precedence in acquisition and can be considered lower in the
repayment rank. The lein priority is another factor to take into
account when considering this type of loan. This
loan is like a first mortgage in that it is secured using the value of
the real estate, but
the interest rate is usually higher with a shorter term than the
initial mortgage.
Some people inquire to obtain a junior mortgage so they may obtain a
supplementary
down payment or even funds for the close of the deal. Additionally,
borrowers may
also want this type of loan as a way to gain access to their properties
equity.
Various requirements of the lender must be met in order to secure a
junior mortgage.
The capacity of the borrower to repay the new debt in addition to the
first loan is a
major deciding factor for the lending institution. This is because the
primary mortgage
takes precedence and the lenders risk for losing funds is higher if the
debtor defaults
on the loan. Another risk is that of a foreclosure when payments can
not be made. But
junior mortgage holders can financially inhibit the first mortgage
foreclosure. Additionally
if a forclosure is initiated by a higher mortgage, it could be a threat
to the trust deed
security. Also the holder who does not joininthe action further risks
losing any proceeds
that remain after the senior loans have been paid.These risk factor
causes various lenders
to be more careful in granting these loans.
Another surety about a junior mortgage, is that some called it a
second mortgage, but regardless of the name the fact remains that this
is but one of several types of
mortgages
available today and you are
sure to find one to you liking and that will fit your individual
situation.
